Liability of Design-Builders for Design, Construction, and Acquisition Claims (2015) / Chapter Skim
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46 federally funded early acquisition."205 AASHTO believes that these factors, when considered in conjunction with the existing factors to be considered during the certification process, as set forth in 23 C.F.R.
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47 work, did a take-off of the structural concrete and rebar quantities indicated in the solicitation design documents. The final design was similar to the one shown in the solicitation and was approved by the owner.
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48 Specifications included in a design–build contract, however, to the extent specific requirements, quantities and sizes are set forth in those specifications, place the risk of design deficiencies on the owner. Thus, the VA reassumed the risk and warranted the accuracy of the specifications with regard to the 196LB/hr boiler output.212 Using logic similar to that seen in Edsall, the board acknowledged that the government could have transferred the risk of design defects to the contractor by drafting the boiler requirement as a pure performance specification rather than by including a prescriptive design requirement: The VA could simply have stated, "install the Steris 3400 GFP sterilizer and a boiler to operate it." Such a specification would have made [the design–builder]
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49 effort during the proposal stage to determine that the agency's solicitation design is flawed.217 J.E. Dunn Construction Co.
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50 drawings, the contractor was certifying that its design complied with building code requirements and other performance criteria. The contractor's scope of work included a performance specification for the fabrication and installation of fiberglass panels that replicated the building's wood roof cornices.
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51 cases in decades.230 Although the trial court agreed with the Navy, the Court of Appeals for the Federal Circuit reversed the trial court's decision and provided an informative opinion as to how DSC claims are to be treated on design–build projects. Metcalf involved a Navy procurement for a $48-million housing facility at a Marine Corps base.
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52 wanted to use spread footings. It was behind schedule because of installation problems with drilled piers on other areas of the project and was looking to save time and money.
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53 The court ruled, however, that the Corps' contract interpretation fell "within the zone of reasonableness."239 It looked to the fact that the RFP used the verb "shall" in connection with incorporating the foundation report's recommendations into the contract, and that, by referring to the terms "overexcavation and compaction requirements," there was an argument that the RFP expressly converted the foundation report's recommendations into requirements.240 Faced with two reasonable contract interpretations, the court then looked to the rule of contra proferentem for guidance on who should bear the risk of these ambiguities. The four-part test associated with this rule places the risk of the ambiguities on the government when: 1)
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54 engineer based his finding on faulty test results, and that, had he conducted proper testing, he might have drawn a different conclusion. Another recent case found that the design– builder failed to demonstrate that it had a differing geotechnical site condition.
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55 DOI ultimately entered into a design–build contract with Drennon Construction and Consulting, Inc. (Drennon)
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56 thought to these requirements, which causes conflicts between and among them. Sometimes, these conflicts can be resolved by an order of precedence clause; other times, a provision requires the design– builder to meet the "most stringent governs" standard.
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57 2. Extent of Design–Builder's Discretion in Choosing Design Standards Several cases have considered disputes between the owner and design–builder over what, if any, discretion the design–builder has to make changes to design standards.
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58 Appeal of Lovering-Johnson, Inc.,263 which was previously discussed in Section A, had a similar result. The design–builder argued that because this was a design–build project, it should have been permitted to change the design submitted in its technical proposal if it met the performance standards.
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59 owner is taking on design liability if the proposed design contains errors in spite of contract language to the contrary. In addition, questions can arise as to whether the owner's actions during the submittal process make it liable for delaying the project.
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60 the Coast Guard's requests as though they were consistent with the terms of the contract…responding to Coast Guard's review comments with brief, affirmative statements, such as ‘[w] ill comply,' ‘[c]
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61 completeness of the civil drawings are, to an extent, subjective and, in some instances, based on requirements that are not in the contract (e.g., demolition plan) ."280 The board concluded, however, that the design–builder had not proven the cause-and-effect of the alleged delays: It is clear that both parties may have had some part in the extended 50% design performance period.
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62 technical grounds. The reasons included: 1)
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63 One other point about the owner's submittal review process must be noted. It is clear that contract language and case law have been protective of the owner's right to obtain what is required by contract regardless of its review and approval of submittals.292 However, a design–builder can use the owner's approvals, or failure to reject or comment, to support a claim that the owner knew the design– builder's contractual interpretation and, therefore, should be bound by it.
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64 Consider Appeal of Strand Hunt Construction, Inc.,295 which involved the installation of windows at a U.S. Army Corps of Engineers complex in Alaska.
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65 Because the design–builder failed to follow its own specifications, and its rebar placement was inaccurate, it had breached its obligations to perform all work "in accordance with the Contract." E Failure of Design–Builder to Meet Expected Performance As discussed in Section II, one of the primary challenges for owners using design–bid–build is that they have to prove whether design or construction is the root cause of a problem.
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66 District,302 which involved the failure of a tie-back anchor block system on a South Dakota emergency slope repair project. The road had a history of slope failures over a year-long period, which appeared to be caused by above-average precipitation.
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67 soil, causing that soil to swell and the basement slabs to heave. Once the slabs heaved, the upward pressure was transferred from the slab to the walls and all levels of the structure, causing all elements of the structure to move differentially.
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68 these, the owner terminated the contract and successfully pursued a claim against the surety. The surety argued that the only recourse for its principal's failure to meet the requirements was that it would not receive its 10 percent retainage.
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69 that the inspector was not responsible for discerning unseen problems developing below the surface. Citing to contract language, the board found that the fact that an inspector may have observed the design–builder performing defective work does not excuse the design–builder from its obligation to meet the contract requirements.
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70 4. Insurance Coverage for Defective Work Many of the cases involving defects on design– build projects arise in the context of insurance coverage disputes.
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71 On the basis of Benham's work product, Maddox submitted a formal proposal to complete the design and construct the work. It signed a contract with the owner in September 1990 for approximately $10 million.
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72 suit against the designer, alleging that its breaches caused more than $12.5 million of the loss. It claimed that a substantial portion of its damages resulted from increased material quantities over the estimates provided by the designer during the bid process.
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73 that the STV subcontract "unambiguously" limited STV's indemnity to instances where claims were asserted for property damage or personal injury directly attributable to STV's negligence. Since the indemnity clause said nothing about economic losses (such as Steelco's claims)
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74 "integration" clause in the subcontract could not bar its claims for breach of the oral contract. The court rejected this argument.
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75 and Pitt had provided a warranty that Pitt's design would achieve the performance criteria and that they should be liable for the consequences of failing to do so.342 Significantly, the court never looked at Pitt's liability from a standard of care perspective. Finding that the plant's owner was a third-party beneficiary of the Alchemy–Pitt contract, the court only focused on Pitt's contractual obligation (i.e., warranty)
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76 between the design–builder and the defendant designers, they could not be held liable for professional negligence to the design–builder. Readers should note that many other design– build cases address the applicability of the economic loss doctrine.348 Because the applicability is state law-specific, it is important for those working on design–build projects to have a strong understanding of this before starting work in a particular state.
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77 is Evergreen Engineering, Inc.
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78 for the ATC.355 There are no reported cases as of yet that answer the above question regarding liability for ATCs. There is a private-sector design–build case that addressed a design–builder's potential liability for having made a VE recommendation that the owner later regretted.
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79 enforceability of these type of LoL clauses. The question generally starts with a determination of whether applicable state law permits the use of such a clause as a matter of public policy.
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80 When project completion was delayed by 8 months, the owner claimed $8 million against the design–builder, arguing that the delay was caused by its failures. In an effort to resolve the dispute, the design– builder offered the owner $332,000 (80 percent of its fee)
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